Positive versus Normative Justifications for Benefit-Cost Analysis: Implications for Interpretation and Policy

摘要

Behavioral-economic and other research suggest that people systematically behave in ways that are inconsistent with standard economic models. This raises questions about economic-welfare theory and the role of benefit-cost analysis (BCA) in informing policy choices. In general terms, BCA provides information about whether a policy change is likely to improve social well-being, defined as an aggregate of the well-being of everyone in a society. But what is the specific justification (or rationale) for BCA? Answering this question is critical for determining how BCA should be conducted and its results interpreted.